Chancellor of the Exchequer Philip Hammond has been handed a boost on the eve of his first Autumn Statement as the UK has this morning announced a smaller-than-forecast budget deficit in October. The FTSE 100 has gained around 66 points this morning while the pound is slightly softer across the board.
Jump in tax receipts give Hammond more room
An unexpected increase in tax revenues last month has contributed to a lower than expected public sector net borrowing figure, which will be warmly welcomed by Hammond as he prepares to announce his mini-budget tomorrow. October is traditionally a strong month for tax receipts and an increase of almost 25% to £9bn represents the highest level for this month since 2010. Despite this morning’s good news expectations are relatively low for any significant expansion of fiscal policy as the prospect of an economic slowdown due to the Brexit situation is likely to hamper any grand plans.
Mining companies raise the FTSE
A substantial portion of this morning’s gains in the FTSE 100 can be attributed to a strong rise in mining companies’ stock prices. Anglo American (LON:AAL), BHP Billiton (LON:BLT) and Glencore (LON:GLEN) are all firmly higher as the increase in metal prices, with copper up by almost 2%, is boosting the sector. The leading UK benchmark has now broken above last week’s highs as the Trump rally from across the Atlantic continues to provide an unexpected boon in London, with all three major US indices breaking above all-time highs in recent sessions.
Kingfisher (LON:KGF) falls despite solid results
Kingfisher shares have moved lower by approximately 2.5% after the home improvement retailer reported its latest set of earnings this morning. Overall the results are fairly solid, with a 1.8% increase in like for like sales reported, largely thanks to the performance seen in Poland and England where Screwfix in particular continues to excel. However the French business continues to lag with a fifth consecutive year of declining comparable sales seemingly weighing on the price since the open. It should be pointed out that the firm is still in the first of its five-year strategic transformation and despite some challenges, the early signs are that it is on the right track. The stock closed yesterday near its highest level of the year and this latest release will go someway to reassuring investors that the steep decline following the EU referendum was a blip for the share price rather than a persistent headwind.